Every market system operates on certain pricing strategies which the retailers are bound to follow. These strategies set definite guidelines and price limits for the products and services sold so that the retailers do not sell them below or beyond the prescribed level. These include MOP, SRP, or MRP. Therefore, it is imperative to know the meanings of SRP, MOP, and MRP to understand their utility in business and how retailers can apply them while they sell their products and services. MRP, SRP, or the MOP have different implications and set various limits on the prices of commodities sold.
MOP Definition: What Does it Mean
The full form of MOP is the Market Operating Price. MOP refers to the actual price at which products or services are available to the retailer. It is also the lowest price at which the retailer can sell these products or offer the services in the market for no profit, no loss. The Market Operating Price is generally fixed by the manufacturers or brands of a commodity. Thus, MOP considers the demand and supply of the commodity in the market and is set accordingly.
The MOP of a product is generally not printed on the commodity. The price printed on items is generally the MRP (Maximum Retail Price). This price is the maximum price at which the retailers are allowed to sell their products.
Suppose you want to find out the actual price at which the retailer has purchased the commodity. In that case, you can look into the price variations of the same commodity across different stores to understand the percentage of profit that retailers have attached to the commodity’s market price. Once you understand how MOP is derived, you can use it as a handy tool to bargain on the cost of overpriced items with retailers.
MRP Definition: What Does it Mean
The full form of MRP is the Maximum Retail Price. MRP refers to the price printed on the product. The maximum retail price is the highest possible price that can be charged for particular products in a specific country. It is mandatory by law to print the price on every product. This pricing system is determined by manufacturers of the product; and followed or applied by the retailers.
Have you noticed the price printed on the product package? It is mandatory by law to print the MRP on the product in specific countries like India and Bangladesh. MRPs are not mandatory for selling non-packaged commodities like services or essentials sold loosely. Packaged foods sold in movie theaters, tourist destinations, etc., usually do not mention the MRP on products.
SRP Definition: What Does it Mean
The full form of SRP is the Suggested Retail Price. SRP refers to the price set by manufacturers at which the retailers are supposed to sell items in the market. SRP plays a crucial role in ensuring the price equilibrium of a commodity so that the same item has an equal price across different stores. Thus, the manufacturers consider the retailers’ profits and other market situations like the costs incurred in manufacturing the commodity followed by suggesting a price at which the retailers sell the commodities. The SRP of an item is set so that the manufacturers, wholesalers, and retailers can earn their expected profits from the market by selling them.
It is thus evident that brands or manufacturers fix both the MOP price and the SRP. While MOP refers to the price at which the retailers buy the products from the manufacturers, SRP is the price at which the retailers can sell their commodities.
Why are MOP and SRP required for large enterprise Businesses?
Both MOP and SRP are crucial in large enterprise businesses because they help bring about a decent and disciplined pricing strategy for buying and selling the products and services of a brand. While MOP ensures the retailers can purchase the commodities from the manufacturers at a uniform price, SRP ensures that the customers across every location in a country can buy these products at a fixed and uniform price. Thus, following a strict pricing strategy is essential for enterprises that sell their products and services across diverse locations. A fixed pricing strategy helps avoid price confusion in the market, leading to widespread customer dissatisfaction.
How MOP and SRP Work in Businesses?
The MOP or SRP helps in bringing about a uniform and well-defined pricing strategy in businesses. They help avoid exorbitant prices of the commodities in the market and ensure that all the retailers and customers can purchase the items at the same price that the manufacturer determines explicitly. Since market conditions, costs incurred, and expected profits of retailers are already considered in the SRP, the MOP and SRP also act as a regulatory tool to control the price of the commodities from rising.
To better understand the price mechanisms and price control tools used in the market, it is imperative to know the meanings of SRP, MOP, and MRP. Each has a different area of action and determines certain specificities in the buying and selling activities between the manufacturers, the retailers, and the customers.
Frequently Asked Questions
What is MOP?
MOP means the price at which the commodities are available to the retailer from the manufacturers. It is often calculated as a percentage discount from the Maximum Retail Price (MRP).
What is SRP?
SRP means the price at which the manufacturers or brands allow the retailers to sell the commodities in the market. It is essentially higher than the MOP as it considers the sellers’ profit motive and the costs incurred in manufacturing.
What is the difference between MRP and SRP?
The brands or the manufacturers determine both MOP and SRP. However, MRP is the price that is regulated and set by the Government, unlike the other two.